Firm with eye on environmental conservation makes high profits

What you need to know:

• Tired of battling the challenges of formal employment, Davies Kareso set up an eco-pencils factory, and the success has been remarkable
• This article was first published on the Nation Africa Website on Wednesday, March 21, 2012.

Battered by the uncertainties associated with formal employment, Davies Saiyianka Kareso, set out in 2004 to start an eco-pencils company in Ngong in the outskirts of Nairobi city. With his university training in marketing, he had worked in the banking and insurance industries, besides engaging in agriculture and the quarry business. Following the advice, he undertook market research and realized that no company in the country specialized in making environmentally friendly pencils.

“I realized that the company that used to make such pencils had closed shop. I felt that this was an idea whose time had come, especially because I wanted to use an environmentally friendly technique,” Mr Kareso told Money.

With Ksh.2 million that he had saved and a contribution from a friend, he set up Ecopencils International – a company that he says today is worth about Ksh.175 million. Work at the factory is labor-intensive and the company has the potential to increase the current 60 jobs to 3,000 once the planned expansion is completed. The main challenge has been getting financing as current interest rates on bank loans are prohibitive. “Expansion and purchase of new equipment has been a challenge because it is difficult to access a bank loan,” he said. The factory uses waste newspapers and graphite lead. The newspapers are cut into the size of graphite lead and then wrapped around the leads using glue. The plant has machines that roll, compact, and smooth out the product. The products are placed in a container for several hours to harden.

I realized that the company that used to make such pencils had closed shop. I felt that this was an idea whose time had come, especially because I wanted to use an environmentally friendly technique

Branding is done before the pencils are distributed to the market. Mr. Kareso says his clients include government ministries, blue-chip companies, and small- and medium-sized enterprises. They have also started receiving international inquiries. The local products face competition from imported pencils from India and the UK. Last year, the business was affected by the challenges that gripped the economy. This year started on a good note, with the company landing some lucrative contracts that Mr. Kareso hopes will give a much-needed boost to the business.

The 42-year-old entrepreneur says the worst turnover he has ever realized was Ksh.90,000 in a month and the best was about Ksh.2 million. “We have just landed a contract to supply 100,000 pencils to the Ministry of Environment. The Ministry of Science and Technology has also said it will buy for us an automatic sharpening machine that can sharpen 100 pencils a minute,” he added. The company has received inquiries on its products from potential clients in Mexico, Ghana, the United Kingdom, and the US but many of them are yet to place their orders. Word on the production of eco-pencils has spread far and wide. This is partly due to the marketing efforts he has made within and abroad.

“I have been to most of the African countries and the potential is enormous, although some regional markets are a bit challenging to set foot,” he said. Currently, the company has received inquiries about its products from potential clients in Mexico, Ghana, the United Kingdom, the US besides a host of other countries, however, many of them are yet to place their orders.

SOURCE: Nation Africa